Massive, multi-year B.C. money laundering investigation ends without charges

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Massive, multi-year B.C. money laundering investigation ends without charges
The E-Nationalize money laundering investigation was one of the biggest ever conducted in B.C. But tonight, a special prosecutor is backing a decision by crown counsel not to lay charges against a suspected money launderer. Christa Dao has the details – Mar 2, 2023

A special prosecutor has determined there isn’t enough evidence to bring charges against an alleged transnational gangster accused of laundering millions of dollars through British Columbia, including at casinos.

It’s the second time a massive, multi-year investigation into the activities the alleged mastermind in the so-called “Vancouver-model” of money laundering has failed.

Former B.C. Attorney General and now Premier David Eby appointed special prosecutor Christopher Considine, K.C., to conduct an independent charge assessment in the RCMP’s E-Nationalize investigation in November 2021, after the B.C. Prosecution Service (BCPS) came to its own conclusion that the file did not meet the standards for charge assessment standard.

On Wednesday, the BCPS confirmed that Considine had independently come to the same conclusion.

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The key issue, according to a statement provided by Considine, related to the language in Canada’s Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA), which requires the Crown to prove money being moved by a suspect is, itself, the proceeds of crime.

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Considine found there was little question that the large volumes of cash the accused, named only as “X” in the filings, was “highly suspicious” and that he was operating an unregistered money services business (MBS).

But he said under the specific language of the law, while the failure to register such a business is itself illegal, a court may not conclude that actually operating one was a crime, leaving a reasonable likelihood that prosecution would fail.

“It is frustrating … But we also have to remember this isn’t all the tools in the toolkit. We have civil forfeiture laws, we have other ways and we’re also constantly as a government improving our ability to go after money laundering,” B.C. Attorney General Niki Sharma said Wednesday.

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“There’s a whole team investigating money laundering in this province, it’s constantly working on investigating charging cases.”

B.C.’s gang-focused Combined Forces Special Enforcement Unit released a statement calling the outcome disappointing, but thanking Considine for his work.

“This was one of the most comprehensive money laundering investigations in CFSEU-BC’s history, gathered extensive evidence and the charges recommended put current Canadian legislation to the test,” spokesperson Staff Sgt. Lindsay Houghton said.

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“CFSEU-BC will continue to work closely with BC Prosecution Service, the Province, and law enforcement partners as we work together to continue to advance the recommendations from the Cullen Commission in order to be able to effectively investigate organized crime and money laundering through additional enhancements to legislation.”

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E-Nationalization investigation

According to Considine’s statement, the CFESU-BC and its sub-unit – the Joint Illegal Gaming Investigations Team (JIGIT) – investigated X’s alleged activities between 2016 and 2018, with an eye to “suspected illegal gaming, loan sharking, and money laundering activities.”

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That probe involved both undercover and covert surveillance operations as well as the execution of multiple search warrants and the seizure of a large number of electronic devices.

Investigators concluded that X would have wealthy clients transfer cash from accounts held outside of Canada to accounts inside China linked to two associates named only as A and B.

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The associates would then deliver a near-equivalent amount of Canadian cash to one of X’s couriers, with handoffs in discrete locations.

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X would either take it to his stash house or deliver it to his loan facilitators, who would sometimes then take it directly to X’s clients.

In other cases, X would allegedly convert the cash into bank drafts or casino chips for the clients.

According to Considine’s statement, between Feb. 4 and May 19 of 2017 X received about $5.4 million in bulk cash deliveries from A and B, provided more than $6 million in cash, bank drafts or casino chips to his clients, and arranged to deposit of about $7.2 million into A and B’s Chinese bank accounts.

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Cullen Commission: Doubts raised about ‘clean’ or ‘criminal’ currency coming into B.C. casinos

Investigators traced the chain of communications for 10 key transactions over that time period, valued at about $2.4 million, and were able to demonstrate the money X obtained was the end result of offshore transfers.

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Ultimately, police recommended eight charges, including laundering currency and possession of property obtained through a criminal offence, failure to register a money services business, participating in a criminal organization, and instructing and counselling a person to commit robbery, intimidation and mischief for the benefit of a criminal organization.

Prosecution problems

Considine said he reviewed several possible obstacles to prosecution in reaching his decision to not go ahead with charges.

The first was the massive volume of evidence, which could have tied the court up in long and messy arguments over document disclosure.

RCMP had collected more than 41,000 documents and more than two million intercepted communications, the majority of them in Mandarin. They also seized 90 smartphones, with the contents of 45 having been extracted.

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Ultimately, he concluded that prosecutors could have overcome disclosure arguments and translation obligations, though noted the process would be resource intensive.

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He also flagged concerns around a similar, failed RCMP investigation known as “E-Pirate” targeting the same suspect.

That case collapsed in 2018 when federal prosecutors mistakenly exposed the identity of a police informant.

Considine concluded that prosecutors could have also overcome potential issues related to that case.

Ultimately it was the need for prosecutors to prove a “predicate offence” showing that the money X was moving was illicit in origin that scuttled the prosecution, he said.

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Considine said the E-Nationalize investigation produced “ample” evidence of X possessing, transferring and sending cash to his clients, along with evidence of intent to “conceal or convert” that cash.

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“The critical question is whether the Crown would be able to demonstrate that this cash was itself the proceeds of crime,” he said. “A judge or jury would need to be satisfied beyond reasonable doubt that the cash X was moving was ‘obtained by or derived directly or indirectly from’ the commission of an indictable offence … and ‘was obtained or derived directly or indirectly as a result of’ the commission of a designated offence.”

Investigators had proposed that X’s operation of an unlicensed money services business served as the key offence tainting the money as proceeds of crime.

But Considine said reviews by police, Crown counsel and his own office were unable to find any Canadian precedent where operating an unlicensed MBS served as a predicate offence in a money laundering case, and the relevant law, the PCMLTFA, fails to specifically criminalize the activity.

The lack of clear legal language or precedent in Canadian courts, he said, meant he couldn’t conclude there was a substantial likelihood — or even a reasonable expectation — of a conviction.

“While it is possible to identify on paper a theoretical legal path to conviction, my instincts tell me a prosecution is likely to founder,” he stated.

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“The public interest would not be well served by embarking on an expensive and lengthy prosecution that comes to naught.”

Considine found that there was a reasonable likelihood of conviction on the file’s lesser charges — but that they would come with short sentences and would not merit the massive resources necessary to overcome the translation and disclosure issues he had flagged.

In submitting the decision, Considine further recommended that legislators amend the language in the PCMLTFA to explicitly criminalize unlicensed money services business, which he said could strengthen prosecutors’ cases when targeting alleged money launderers.

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